Money & Rights

How to find a lost pension

Moving jobs, lost paperwork, company mergers- all are common reasons for losing tack of your pensions. Marianne Curphey puts you back on the trail

Over a working life that might span 50 years, it's no wonder retirement savings can get lost. Yet it can be difficult to know where to start if you need to track down a lost pension.

If you know one of your retirement pots is missing, you are not alone.

Over half the population has more than one pension, and more than one fifth of those have lost track of where their retirement savings are being held.

Research by the financial services company Aegon estimates that 64 percent of people have multiple pensions. Of those, the number who have lost track of all or one of their pensions is 22 percent. This means that more than seven million people could have misplaced some of their retirement savings.

Wealth management group Tilney also estimates that one fifth of people have a missing pension, often because they failed to notify providers when they moved address.

According to Tilney's research, the average person has worked for 5.8 employers by the time they are over 55, so it's not surprising pensions are lost or misplaced.

This is a problem that looks set to get worse among the younger generation as changing employment patterns mean people these days are more likely to work for multiple employers over their working lives.

First steps to finding your lost money

The UK government's Pension Tracing Service is an online database which provides current contact details for past and present pension schemes.

To use it, you'll need to know the name of your former employer, pension scheme or provider.

The DWP has also been working with the pensions industry, regulators and technology firms with a view to launching a Pensions Dashboard. this would provide people with a consolidated view on a single website of all their work pensions alongside their State pension.

Katie Smith, Head of Pensions at Aegon, says the Pensions Dashboard should simplify the process of finding lost pensions. However, at the time of writing there has been speculation that the idea may yet be abandoned by the Government. Pensions Minister Guy Opperman told the work and pension select committee on July 20th that the Government was still "doing a feasibility study, they are then reviewing that, and a decision will be made". While not ruling out the Pensions Dashboard, he did not give a firm reassurance that it will go ahead either.

Katie Smith says "ditching the dashboard at this point makes little sense and would ultimately make people's retirement planning harder."

Rather than wait for the Government's final decision, it is worth trying to locate your pension, using other means, even if you suspect it may not be worth much.

"It is vital to track down these pots of assets and to determine whether they remain fit for purpose," says Andy James, Head of Retirement planning at Tilney. He says tracking down missing workplace pensions can be problematic where a previous employer from many years past has been acquired or gone bust, moved or re-branded.

How to trace your pension

1) Use the DWP Pension Tracing Service to find your pension by entering you old employer's name, which will generate the current contact address. Simply write to this address, with your current and previous addresses and your National Insurance number. Log on to: www.gov.uk/find-pensions-contact-details

2) Some pension schemes won't have been updated for some time. To get the contact details you will need to fill out an online form with your name, email address and any information you believe is relevant, such as the dates you were at the company and your National Insurance number.

3) Get a State pension forecast, either in paper format or online at: www.gov.uk/check-state-pension

4) Once you've tracked down your pensions, get advice before consolidating them, to make sure you don't lose out on any valuable benefits.

How to manage you retirement savings

One option to avoid losing track of different pension pots is to combine them into one single pension provider. This isn't an option for everyone because:

1) Older pensions may have benefits which would be lost if you moved the money.

2) You may end up paying penalties to transfer, or receive a lower transfer value than the actual sum you have accumulated.

3) You may be paying a low charge for your pension to be managed under the current scheme.

4) You don't want to consolidate all you funds only to find you are paying a much higher management charge.

Aegon's survey found only 27 percent of people are interested in consolidation. The top three reasons for not moving their pensions to one provider were:

1) 46 percent don't want all their eggs in one basket

2) 27 percent don't know the benefits of moving all their pensions

3) 27 percent don't want to pay for an adviser.

Aegon's Kate Smith says pension consolidation wouldn't be right for everyone, although if you have a lot of small pots it could mean you would be better able to keep tabs on them and manage them,

"Some older-style pensions will have valuable benefits which may be lost on transfer," she says. Bringing together smaller pots might, however be beneficial.

"It's difficult for people to keep track of small pension pots, particularly at the beginning of someone's working life."

Pensions freedom

As a result of the new pensions flexibility you are no longer obliged to buy an annuity with your pension fund when you retire.

One option is draw down, which enables you to take money from your fund without converting the whole pot into an annuity.

Another is cashing in your pension, which has become common among people with small funds. However, you should think very carefully before you take this route- you will most likely have to pay extra tax, and you may be hit by exorbitant fees.

The City watchdog, the Financial Conduct Authority (FCA) has recently published a report warning that savers who have crashed in pensions under new freedoms are losing up to £13,000 in rip-off fees. About 100,000 savers area at risk of 'complex and opaque' charges levied by insurers when they begin to withdraw money form their pensions, it found. In the worst cases, customers are paying up o 44 separate charges, the FCA found. It said some pensioners were overpaying by as much as £650 a year on £100,000 pension-pot or £13,000 over a retirement spanning 20 years.

What's more, 50,000 savers are missing out on a third of their potential retirement income- or about £1500 a year- because their money has been moved into a poor-value cash fund that pays little or no interest.

The FCA has announced it will introduce tough new rules to protect customers falling victim to these charges,. This could include a cap on fees, forcing insurers to spell out charges, and banning them from automatically moving customers into poor-value cash funds in retirement.

Until that happens, it is important to think through all the options carefully before you withdraw some or all of the cash from your pension.